Thursday, April 4, 2013

"India Pale Ale displayed the strongest unit growth in 2012"

It should come to a surprise to no one, but sales tracking company GuestMetrics has released a report showing that IPA kicked ass and took names last year. According to their database (from POS systems in restaurants and bars), IPA showed stronger growth than any other type of beer last year: an amazing 39% year on year. And it's accelerating going into the second quarter of 2013; 1Q 2013 showed 40% growth. 

And who's doing the best? "Based on data from GuestMetrics, the IPA brands with the largest share gains last year were Widmer Broken Halo IPA, Lagunitas India Pale Ale, Sierra Nevada Torpedo Extra IPA, and Ballast Point Sculpin." 

Meanwhile, the flipside -- which might have sent craft beer geeks into spins of delight five years ago, but now only evokes a "damn straight" nod and grin -- is that "pale lager" is sucking wind.  
"Pale Lagers saw unit sales contract by 5% in 2012 compared to the prior year, and as a result, experienced by far the largest share loss at about 170 basis points in 2012," said Peter Reidhead, VP of Strategy and Insights at GuestMetrics.  "Additionally, in analyzing the quarter of 2013, the picture does not appear to be improving for Pale Lagers, with units contracting 6.2% against prior year, and the share loss accelerating slightly to 180 basis points."  Based on data from GuestMetrics, the Pale Lager brands with the largest share loss last year were Miller Lite, Bud Light, and Budweiser.
Like I told someone in an interview the other day, betting against IPA is like betting against vodka: don't do it. This is not a cycle. This is not a trend. It's a straight, upward line. People have been looking for IPA to peak and head back down since 1995, and they've been wasting their time.  

Just look at craft beer branding these days: it's all about different kinds of IPAs! We have black, double, session, rye, red, green, wheat, and white IPAs, and you can bet I missed some that a brewer is concocting even now. Brewers see that putting "IPA" on your label is like rubbing money on it; hops are crack, like Dogfish Head said about 90 Minute IPA, that's the sickness and the cure! 

19 comments:

Alan said...

"It's a straight, upward line. People have been looking for IPA to peak and head back down since 1995, and they've been wasting their time."

Noting that to file for future reference. Please also see Stan on "extreme" today. Everything changes, that's a fact... so sayeth the Boss. Money will chase the money wherever.

Lew Bryson said...

Granted, Alan, but I've got a foot in the spirits biz, too. Bourbon: cycles. Scotch (especially blends): cycles. Gin: cycles. Rum: cycles. Cognac: cycles. Tequila: boom and bust cycles.

Vodka? A straight climb since the 1950s, to over 30% of all spirits sold today. Multiplicity of brands that just keep coming. Explosion of flavors (and yet the straight stuff is still the big seller). Will growth eventually taper? Sure, because other spirits WILL be sold. But they've got years to go, even at this rate.

So, will IPA eventually flatten? Sure. But after watching a 20 year tear, I'm betting it's got at least another 10 years to go. File it.

Ken and Ali said...

We saw really similar results late last year when looking at RateBeer data (in terms of what new beers are being created year to year internationally). #1 winner: IPA, #1 loser: pale lager. Some additional details in there, too, basically confirming what we already sort of know.

Link: http://us2.campaign-archive1.com/?u=927a170c4a7bc5ac2c11d7a5f&id=ae8ff00c56

(Caveat: I'm planning to slightly de-geek these posts heading forward. Should have made this one simpler.)

Chris said...

Weird thing is, pale lager is at least as good a style as IPA, it's just not made right in too many countries, the USA included.

Lew Bryson said...

Well...I think they're looking at the US VERSION of "pale lager" here, not at pilsner, or helles, or any of the other classics. They're talking about light beer and Bud-style. And I don't think that's as good a style as IPA, generally speaking.

We DO make good pilsners. Just not in huge amounts. Yet.

Anonymous said...

hasn't light beer been increasing for the past 40 years? I'm not talking general pale lager category (that includes brands like bud) but specifically light beer. What does light beer and vodka have in common? Both downplay taste and many would say basically tasteless. IPA has plenty of flavor and that is the difference. current generation of geeks will age quickly and lower their consumption while something "new" (which will probably be something old that most dont realize) will take off in its place, just like Alan said.

sam k said...

Considering that pale lagers account for millions of times the volume of IPAs (I'm randomly guessing here), I don't think they're feeling the IPA heat on their backsides just yet, though they are no doubt licking their more general wounds when the curtains are drawn.

Lew Bryson said...

Of course not, Sam, but I guarantee you they're concerned about the trend. And if they react in the same way they did to "wheat beers"...just imagine what that's going to do to hop prices.

Gary Gillman said...

In my view, your comments underline what I always felt: IPA/pale ale is the greatest beer style ever. Hodgson in London late 1700's knew not what he unleashed. Its power to captivate is shown by its great Victorian successes but just as potent cojones the other side of the pond even powered by different hops.

I agree with Chris that if the U.S. made more great pale lager it would show better results. And too there is a strange and undeniable connection between the two styles, enhanced by the suspicion of some eminent voices that pale ale got the whole pale lager thing going.

Gary

Anonymous said...

Nice to see you still blogging about beer. I bet most of the IPA growth is the extreme beers. Has to be an awfully small part of the market.

Bud and High Life are has beens over taken by lite beers.

Lew Bryson said...

IPA isn't 'extreme,' unless you're talking about the double/imperial types. Lagunitas and SN Torpedo certainly aren't. It is likely under 1% of the total market, though that's not the point. The point is the growth...which is strong and consistent. Likewise, Bud Light and Miller Lite were tagged as two of the three biggest losers. A significant reversal in fortunes, though lite beer is obviously still immense.

Steven said...

I know until recently i never really liked IPA.but then my local brew pubs Timber Creek and Voodoo have made some IPA i finally liked.so there not just for the hardcore beer geeks anymore.

Leigh said...

Yep - agreed. IPA is here to stay! 'Craft's Flagship' for sure.

JP said...

It is really indicative of changing tastes of the younger demographic in the US, maybe goes on for the next 30 years maybe the next 6 months, who knows with fickle millennials, but you cannot deny the new normal and I would not bet against it in the medium /long term for sure. The big 2.5 are not too concerned, however. They are looking for growth elsewhere, and I do not think they will throw a lot of money into marketing ales. I am sure they will get involved, but not in a big way. AB is looking at other opportunities like Modelo to grow in emerging markets which is where they see the real growth (and margins). I really do not see them trying to compete all that much with craft brewers in the states, where in a blue skies scenario will control say, 15-20% of the market in 20 years. When farmers in the Shandong province or Oaxaca prefer india pale over their local lager then the global macros will get involved until then they are happy to turn their 200billion plus business into a cash cow and forgo growth here.

jp said...

I was in a local (pgh) watering hole on Saturday in between yard work sessions and was surprised to see they went the way of the multi tap craft line up. This was a classic bastion of macro pale lager. Well, out of the 20 or so varietals, I counted SIX IPAs of various labels, people really must go for it to control that much space. I settled for a stout and Lew, full disclosure, I had (wait for it), a Killians stout. It was more like a porter and I have to admit I found it pretty darn good either my standards are slipping or they are making some better ale(probably both) So maybe they are a little more concerned than I think.

Steven said...

"...people really must go for it to control that much space."

Therein is the question I always ask myself when I see so many IPAs on shelves -- "How the heck can these brands sustain themselves with so much competition?"

I saw it happen in the early to mid-90s when everyone jumped on the Pale Ale bandwagon because Sierra Nevada was so popular; some good, others not so. But so many passed to the wayside because of overabundance (and burned me out on Pale Ale) I have to wonder what the future holds for so many beers of the same or similar character.

Lew Bryson said...

Well, how do all those merlots and chardonnays and shirazes compete? Niches, brands; slight differences in flavor, price, or label; local love vs. rare temptation. All kinds of stuff.

Steven said...

"Well, how do all those merlots and chardonnays and shirazes compete?"

I understand your point, but the quick answer is that they don't compete. My wife and I have had a couple favorite Zinfandels (not the white variety) over the years that have all but disappeared because our retailers pull them due to lack of sales.

I'll bet that will happen with all but the best IPAs -- or all but the ones that have good label recognition.

Lew Bryson said...

That's what competition is! Some of my favorite IPAs are no longer around -- the brewery went under, or they dropped the IPA, or they reformulated it/renamed it -- and there are always new ones. Almost any new brewery that opens -- a LOT of them, as you know -- brews an IPA. They have to. And there are a solid number that survive: Harpoon, Two Hearted, HopDevil, Goose Island, Ruination, Brooklyn East India, and more. It's a big chunk of the shelf. Again...it's like vodkas. There's churn, but there are standards, too.